One chart shows how railroads adjusted to pandemic traffic levels

If anything encapsulates the wild ride railroads have been on since the COVID-19 pandemic hit, it’s this slide from CSX Transportation’s second quarter earnings call. It’s definitely one of those times when a picture is worth a thousand words if you want to understand how railroads quickly adjusted their operations to dramatic swings in traffic volume.

The chart shows, in navy blue, how traffic fell off a cliff in late March, bottomed out in May, and slowly climbed out of the hole in June. (Ignore that sharp downturn in early July, which is the result of the Fourth of July holiday.) By mid-July traffic volume was within 7% of pre-pandemic levels.

What’s interesting are the lines that reveal how CSX responded as the economy was shut down and traffic dried up. The yellow line shows the active locomotives in CSX’s fleet. The light blue line shows overall train starts, which includes yard and local jobs. The green line depicts just the number of road train starts.

As the pandemic clobbered volume in March and into April, note how the number of road trains CSX operated closely parallels the decline in volume. Then something curious happens: The number of road trains continues to fall and doesn’t recover nearly as fast or as far as traffic returned to the rails.

This is the result of CSX moving its tonnage on fewer but longer trains. It’s also a reflection of other operational changes CSX made along the way.

When North American auto assembly plants shut down for several weeks amid the pandemic, Class I finished vehicle traffic all but disappeared. Auto rack volume was down around 90% for six weeks on most systems. When cars began rolling off assembly lines and filling multilevels again, CSX had decided to tack this traffic onto merchandise and intermodal trains instead of relaunching most of its automotive unit train service.

This is one of the biggest reasons why the number of road train starts is nowhere near the railroad’s overall volume recovery. And it also explains why Jacksonville is taking its time recalling furloughed crews as it runs fewer trains. The bottom line is that CSX’s traffic has grown 25% since bottoming out in May, yet the railroad is only using 13% more locomotives and 14% more road train starts.

This experience is not unique to CSX. In fact, all of the Class I railroads took similar steps to cut costs by running longer trains, parking locomotives, idling yards and shops, and furloughing train crews and mechanical employees.

And many of the operational changes are likely to stick around long after the economy and rail traffic bounce back from the pandemic, railroad executives said on their earnings calls over the past two weeks. In other words, railroads will continue to do more with less.

You can reach Bill Stephens at bybillstephens@gmail.com and follow him on twitter @bybillstephens